JOHANNESBURG (miningweekly.com) – Mozambique’s Ministry of Energy and Clean Carbon Industries (CCI) on Monday signed an agreement to undertake a full feasibility study for the development of a coal-to-liquid plant in the Tete province.

The parties aimed to produce 40 000 bbl/d of transport fuel and chemical by-products from up to 17-million tons a year of low-grade, nonexportable and nonsaleable coal, said CCI, a joint venture between Twin City Venture Capital, Hugh Brown & Associates, local Mozambique shareholders and a team of international engineering specialists.

The first 20 000 bbl/d would be allocated to Mozambique, which was estimated to consume 17 000 bbl/d. The excess fuel would be converted to chemical feedstock for export or exported directly to neighbouring countries, such as Tanzania, Malawi, Zambia, Botswana or other regional Southern African Development Community countries, which would reduce the transportation cost of fuel to these markets, owing to its close proximity.

Further, to enable transport of the products, the parties aimed to develop a pipeline from Tete to Savane, north of Beira, extending to existing port fuel-handling facilities in Pemba, Beira, Quelimane and Maputo.

Following the completion of the first phase of a prefeasibility study - the results of which were released to Minister of Energy Dr Salvador Numburete and his team in Maputo - CCI signed a memorandum of agreement with the ministry for the development of the project, in March.

CCI was currently completing the final stage of the prefeasibility study, which included testing coals, developing concept technology designs and project configuration.

The company aimed to complete a bankable feasibility study by the end of 2014 and start the construction of the plant during the first quarter of 2016.

“The project will deliver benefits for the entire sub-Saharan region and will generate new income streams for Mozambique, as well as social benefits for local communities,” said CCI chairperson Arnold Pistorius.

He pointed to the increasing fuel costs in global markets creating barriers for economic development, and the opportunity for Mozambique to enhance entrepreneurial development through the establishment of fuel and related value-added products produced from low-grade coal.

CCI CEO and Hugh Brown & Associates chairperson Hugh Brown added: “The realisation of this project is based on efficient conversion of low-cost feedstock to syngas and liquids, which are not directly linked to the oil price.”

The Tete basin comprises extensive coking, thermal and low-grade resources of coal and, over $4-billion has been invested into the region by mining companies, such as Vale, Rio Tinto and Ncondezi Coal, advancing the exploration, development, construction and commissioning of new coal mines in the region.

South Africa’s Sasol is the world’s biggest producer of liquid fuel from coal and was the first company to commercialise the Fischer-Tropsch method of converting coal to liquid fuels and chemicals.

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